Mountain View Voice

News - January 13, 2012

Agency could end hospital's tax power

LAFCO could kill El Camino's income from property owners

by Daniel DeBolt

The county's Local Agency Formation Commission might be an obscure agency, but a new state law has empowered it to bypass voters and eliminate special districts, and the El Camino Hospital District may be its first target.

"If we find that if there's a district that isn't needed anymore, we may move for dissolution of that district," said Mountain View City Council member Margaret Abe-Koga, a member of the LAFCO board.

A recent Grand Jury report questioning the activities of the district has prompted LAFCO to take the unusual measure of auditing the hospital district as part of a regular service review due in May — a review that could recommend the district's dissolution, said LAFCO executive officer Neelima Palacherla.

The hospital district includes Mountain View, Sunnyvale, Los Altos and adjacent unincorporated areas.

But hospital district officials disagree with Assemblyman Rich Gordon, who authored AB912, about its power over hospital districts.

The new law "doesn't apply to healthcare districts," said Chris Ernst, director of marketing and corporate communications for El Camino Hospital.

Staff members in Rich Gordon's office who spoke to theVoice disagreed with Ernst's assessment.

"The answer is pretty simple," the staff member said. "AB912 as written is encompassing of all special districts, including healthcare districts."

In response, Ernst said that AB912 did not change the state law applicable to hospital district dissolutions.

"Government code section 57103 specifically states that any resolution ordering the dissolution of a health care district is subject to confirmation by the voters," Ernst wrote in an email. "AB912 modified only Government Code section 57077 and did not terminate or otherwise modify, amend this statutory requirement in Government Section 57103."

Law's intent

Gordon's office said that was not the legislature's intent, according to the analysis of the bill state legislators were given before they voted to pass it with "overwhelming bi-partisan support."

"Absent majority-protest, the dissolution occurs without an election," the analysis reads. "For district dissolutions that are consistent with LAFCO policies, the bill trumps special statutory provisions, including those for hospital districts."

"That was the understanding of all legislators who voted on the bill and the governor who signed it into law," said Gordon's staffer.

LAFCO hopes to clarify the matter.

"That's something that's being looked into," Palacherla said. "When the legislation was being drafted that was the intent — that hospital districts will not be exempt. That will be clarified, I think."

Grand jury's concerns

Abe-Koga said the agency's interest in the hospital district was raised by last year's Santa Clara Civil Grand Jury report, which questioned El Camino's purchase of a facility in Los Gatos, outside of the hospital district. The grand jury report also found that the hospital district and the non-profit organization formed by the district "appears to operate as one unit," intermingling funds in such a way "that one cannot delineate how taxpayer contributions are spent" — an assertion that hospital officials dispute.

"We felt it was important to look into it given the grand jury report," Abe-Koga said. "Concerns have been brought up. There have been concerns about the purchase of the Los Gatos facility. How are they able to purchase a facility outside of the district?"

Palacherla said the El Camino Hospital District is one of 70 healthcare districts in the state, created after World War II to alleviate a hospital shortage, mostly in rural areas. It is run a by a publicly elected, five-person board, the same board which runs the hospital.

"The question now is what are these districts doing and is it appropriate for them to continue?" Palacherla said. "Are they meeting the mission and mandate for which they were created?"

In 1956, the El Camino Hospital District was created to run a hospital and to operate it, Palacherla said. "Over time they have transferred the hospital to a non-profit corporation and the non-profit corporation now runs the hospital. So the question is, 'What does the hospital district do?'"

Ernst said that the district provides $9 million a year to the hospital in the form of a 1 percent parcel tax, while another $6.5 million a year pays off voter-approved bonds for new facilities on Grant Road. Of the tax money received last year, $5 million went towards "community benefit" programs, such as the Mayview Health Clinic and the Community Health Awareness Council, among others.

She says that the hospital publishes an annual audit online and in local newspapers that clearly shows how district funds are spent.